Examining Transparency And Exchanges

AdExchanger.com reached out to members of the digital advertising ecosystem to explore transparency and the role of exchanges, buyers and sellers of online media and their intermediaries.

AdExchanger.com welcomes your comments at the end of this post.

The question is as follows:

Regarding the recent dust-up between an ad network and several publishers as highlighted in Mediaweek, is more transparency needed from exchanges, for example? Or should this be managed better by ad networks, demand-side platforms... and/or publishers for that matter?

Transparency would be great, but I don't think it's realistic. Too many players have too many incentives to keep their info to themselves. SSPs (and secondarily DSPs) will help just because people's more outlandish claims will become harder to believe. All in all, I don't think the problem gets solved nor is its economic impact noticeable.

The increase in testing of optimizers and ad exchanges by publishers has brought with it more opportunities for both monetization and, unfortunately, channel conflict. With regards to the latter, it appears that publishers aren't aware to the extent that their brands may be exposed in the marketplace. This highlights the point that perhaps these platforms aren't the holy grail of second channel monetization were billed as.

How can this be better managed and by whom? The answer to the question is relatively simple. First, with any potential partner, publishers should seek transparency surrounding the business practices, use of data/information, and ensure that their primary sales channel is protected. Second, industry solutions such as ad verification or the proposed IAB standards, which are largely focused on protecting the advertisers, should be equally focused on addressing publisher needs and goals.

It is apparent that the media transparency issue is one that will not be going away anytime soon, but unfortunately is also a challenge that flies directly in the face of the drivers that are shaping the new online advertising eco-system. The way I look at it, we are essentially in an "adolescent" stage of an industry whose growing pains are related to both "youthful experimentation" and "awkward interactions".

For publishers, there is a constant drive to experiment with new ways to generate revenue, to combat offline revenue disintegration and growing online fragmentation. There is risk and reward to all of this experimentation, but the learning process is critical to their survival.

Pubs should not be taken to task for trying new things out.

Advertisers seem to want it all - aggressive pricing, data-driven audience buying and media transparency - creating an awkward relationship with their media sources as based on the way current media buying structures are set up and mutual exclusivity of all three concepts. It may be tough to swallow, but in order to be fair to everyone involved, there needs to be real consideration of what level of transparency can be expected when a buyer is getting rates significantly below market.

Ad networks, SSPs and DSPs can address this and help the industry mature by balancing the transparency - pricing matrix and actively including publishers in that process. By creating "levers" which can drive more or less transparency in media source as directly related to price that the buyer is willing to pay for media, the relationship between transparency and value will be made much clearer and all those involved will be active
participants in knowing exactly where they stand. Right now I don't feel there has been a clear cost-benefit structure developed between the two, with the exception of companies like InterClick who has done a good job in driving the concept of "transparency value". High quality data and auditing functions from people like AdSafe and Double Verify can be applied at different ends of the transparency spectrum to ensure buyers demands are met at any price. eXelate is beginning to experiment with this concept on the data side and is experiencing great results.

Net-net, there are opportunities for all of the players involved to build transparency structures that make sense, but it will take collaboration, experimentation and most importantly patience for these concepts to reach adulthood.

I do think buyers will pay a premium for transparency in the exchanges, but I think the market will take care of that relatively quickly. Google's exchange has provided the right mechanism - sell it both ways and measure the difference in yield.

But this dust-up isn't really about transparency. It's about whether there's an effective strategy for "branded" destinations like TheStreet.com and WSJ to leverage indirect sales channels like networks and exchanges. There's a sea change underway in how online advertising is bought & sold and it threatens these sites's core proposition.

Publishers need a consistent strategy, and I don't think you can go halfway. They should either reject indirect sales channels altogether (as these sites are claiming they've done) or they should have a centralized strategy with a single yield optimizer or exchange. That ensures that the strategy, pricing and message are consistent for the market. If someone's making false statements about access to your inventory, you've got a single point of contact for tracking it down.

Improved transparency will be required by all advertisers buying media in the near future. Most Ad networks and demand side platforms have pushed for transparency across the media they buy as far too often a media buyer has been burned by buying inventory across questionable sites and placements.

Before brand verification was a hot buzzword smart advertisers like Microsoft and AOL were verifying where their placements ran and canceling ad networks that were not adhering to strict site lists. Most agencies now require site lists from all of their media partners.

All that said, ad networks continue to list sites that may or may not be included in a campaign and the inventory that DSPs and ad networks have access to fluctuates on an hourly basis. Compounding this, publishers are not always aware of where their ad inventory is showing up because when they place their inventory on one exchange or ad network it might show up on another if it is resold.

The evolution of this is that media needs to be verified so that a media buyer (whether at an agency, DSP, or ad network) knows that the inventory is what it says it is.

1 Comment

I agree with Mark that the industry is an adolescent and is experiencing some growing pains. But I believe the drive toward transparency is inevitable and we will get there as an industry -- it's just a matter of time. As advertisers become more savvy about how to optimize campaigns, the demand for complete transparency will only increase and they will not accept opaque networks or exchanges.